Without audience targeting are Google Ads Dead? Think again…
Early this month Google announced new restrictions for targeting specific audiences. The restrictions apply to content related to housing, employment, credit, and those who are disproportionately affected by societal biases. The news of these restrictions created quite a stir among industry brokers and lenders who heavily rely upon targeted Google ad campaigns. All which may have you asking if these changes will kill future reverse mortgage advertising on the world’s most popular search engine. In just a moment we’ll hear from our online SEO expert Josh Johnson to find out.
Google’s restrictions are not necessarily novel nor unexpected. It was just over two years ago Facebook faced scrutiny from federal regulators for allowing those offering credit or housing finance to restrict ad audiences by race or religion among other questionable metrics that would violate HUD’s fair housing rules. An investigation by ProPublica broke this news in October 2016. It was nearly two years later in August 2018 that HUD filed a formal complaint against the social media giant for discriminatory advertising practices. Seven months after HUD’s complaint Facebook announced sweeping changes. Both Facebook and later Google, took a blunt approach much to the chagrin of lenders and service providers.
What ad filters are going away? In its official release Google revealed, “credit products or services can no longer be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”
Is this the end of Google ads for reverse mortgages? To answer that question I reached out to Josh Johnson who heads up Reverse Focus’ Online Dominance SEO program and Google marketing. Here’s his explanation.
Here’s what makes Google unique from other platforms and why reverse mortgage Google ads will continue to reach the intended audience.
To summarize, older homeowners are intentionally seeking out reverse mortgage information on Google which means, yes-your ads will be seen by your target audience, even though you can no longer target specific age groups.
The move away from the LIBOR was expected, the sudden deadline for HMBS was not
Last Monday Ginnie Mae, the government bond-insurer, declared the agency will no longer accept any mortgage-backed securities or MBSs attached to the LIBOR index. The policy effective date for HECM loans is January 1st, while traditional mortgage-backed securities restrictions go into effect January 21, 2021.
Our industry’s adoption of the LIBOR index began with d issued October 12, 2007. It permitted FHA to insure HECM loans using either a 1-year LIBOR index for annually adjustable loans and the 10-year swap rate for monthly-adjustable HECMs. By 2008 most lenders had switched to the new index.
During the transition to a new index trouble was brewing for the LIBOR. Between 2003 and 2013 global regulators advised financial institutions to move away from the index. The troubled LIBOR faced even more scrutiny in 2012 when Barclay’s Bank entered into several criminal settlements which revealed fraud and rate manipulation by colluding banks. The legitimacy of a benchmark lending and financial institutions used across the globe was officially tainted.
Back to last week. While Ginnie Mae’s move away from the LIBOR index was anticipated the announcement of a fast-approaching deadline caught many by surprise as the transition to a new interest rate index had not yet been finalized for the Home Equity Conversion Mortgage.
In July 2017 Reverse Mortgage Daily reported on industry plans to work to implement a replacement index before changes take place. In May 2019 Michael Drayne, SVP of the Office of the President of Ginnie Mae discussed the impending index change at the NRMLA Eastern Regional Meeting in New York saying, “The amount of time we have to figure everything out is less reassuring the more you look at how complicated this problem is.” Drayne headed the effort to work with lenders who issue securities in both the traditional and reverse markets. During Reverse Mortgage Daily’s July 2020 Summer Virtual Meeting New View Advisors Michael McCully said our industry stakeholders were working to take “active steps to prepare for the sunset” of the index. He added, “Our principal concern is that we want our industry to adopt the same widely recognized liquid, mainstream global index or set of indices that the rest of the mortgage industry [will use]. We want to be lockstep with the rest of the financial markets, and do not want to end up having a different index than the rest of the financial markets and financial world uses. That’s our overriding objective.”
According to a recent column in TheMReport traditional mortgage lenders moved away from the LIBOR more quickly than their reverse mortgage counterparts. Bonnie Sinnock writes this in the American Bankers Asset Securitization Report. “Due to historically low fixed rates and plans to phase out Libor, traditional ARM securitization at Ginnie has declined notably in the past year. It was $12 million in August, down from $68 million during the same month the previous year. In comparison, newly securitized reverse mortgages continue to run at a rate of $500 million to $600 million per month on average, according to capital markets consultancy New View Advisors.”
What transpired between the ongoing discussions between Ginnie Mae, HUD, the Federal Reserve’s Alternative Reference Rates Committee, and our industry stakeholders leading to a sudden deadline remains to be seen. The good news is our industry has a long established history in using the CMT (Constant Maturity Treasury) rate. In addition, the HECM’s adjustable rate note states if an index is unavailable one can be prescribed by the Secretary of HUD. To date no official rate index has been announced by HUD. In its August 4th letter to the Consumer Financial Protection Bureau NRMLA appealed to use an index that is ultimately adopted by HUD which has similar historical rate fluctuations as the former LIBOR index.
Additional resources cited:
The MReport column on stoppage of LIBOR-based MBS
The Asset Report / American Banker article
NMRLA’s letter to the CFPB on choice of replacement index